Conroe, September 5 – The snakes slithered and the snake oil flowed at the August 28, 2018, meeting of the so-called Montgomery County Toll Road Authority (MCTRA), which is really just another name for the Montgomery County Commissioners Court. Last Tuesday, Montgomery County Craig Doyal, Precinct 2 County Commissioner Charlie Riley, and “financial advisor” Terrell Palmer announced that MCTRA was repaying the County government “in full” for the money they had taken from the taxpayers’ general fund to pay for the Decimation of Hope Highway, also known as the $107 million, 3 mile, TX 249 Tollway.
The repayment “in full” lie rapidly fell apart when they made the mistake of permitting Precinct 3 County Commissioner James Noack to ask a question to County Auditor Phyllis Martin: “Is this repayment in full?” Martin burst the bubble when she explained that MCTRA still will have not repaid $500,000 taken for the Tollway and never repaid under a loan agreement where the MCTRA borrowed money from itself as the Commissioners Court.
Doyal called Palmer, who supposedly has a fiduciary duty (to exercise the highest care and loyalty) to the podium, to announce the repayment “in full.” Palmer explained that an independent, yet un-named, accounting firm had determined the interest rate and the repayment amount of the interest at $109,615 on “borrowing” of $7.78 million. That, of course, seemed odd, because, even if the loan had only been for one year, that would have denoted an interest rate of approximately 1.41% per annum.
In reality, most of the $7.78 million which Doyal and Riley took from the taxpayers was 3 years ago, suggesting that the actual rate of interest was less than 1%! The explanation came when Palmer disclosed that Doyal, Riley, and Palmer chose to repay the “loan” at the interest rate of TexPool Prime, which is not actually a lending rate at all.
TexPool Prime is a government-backed mutual fund which currently yields an interest rate of approximately 1.21%. It is one of the most conservative mutual funds in public markets and, therefore, pays an extremely low rate of return. Only government entities may invest in TexPool which is designed specifically to comply with the statutory limitations on government investments.
At the same time, a true loan would peg to the Wall Street Journal Prime Rate or a similar national rate. Presently, the WSJ Prime Rate is 5.00%. The 52-week low for the WSJ Prime Rate was 4.25%. That means that a Fortune 500 company with a strong financial statement would likely be able to borrow money at 5.00% or a bit higher. It’s important to note that the money that Doyal, Riley, and Palmer took was much riskier than a prime rate loan, because there were no assets to back up the borrowing when they took the money (since there was no tollroad and there were not even bonds yet to pay for a tollroad.)
Doyal issued a press release yesterday in which he bragged that the County government had pay the taxpayers interest. In reality, Doyal, Riley, and Palmer shorted the taxpayers at least $280,000 in interest, even if the loan were at Wall Street Journal Prime Rate.
Sadly, Doyal, Riley, and Palmer even fooled Noack and Precinct 4 County Commissioner Jim Clark to vote to accept the pittance as repayment for the money they took from the taxpayers. The vote was unanimous on August 28.
In additional action, Doyal, Riley, and Precinct 1 County Commissioner Mike Meador voted for a resolution to purchase the Woodtrace Detention Pond and access easement for the Decimation of Hope Highway. The connection between the Decimation of Hope Highway and Woodtrace Boulevard is vital to Riley’s and Doyal’s plans to plow a Woodlands Parkway Extension through to F.M. 2978, in violation of Riley’s campaign promises but consistent with the HGAC Major Thoroughfare Plan which Riley and Doyal proposed in 2016, one year after voters had rejected the Woodlands Parkway Extension. “Woodtrace Boulevard” is the new name for the “Woodlands Parkway Extension.”